A Product Sells for $20 Per Unit,and Has a Contribution

question 73

Multiple Choice

A product sells for $20 per unit,and has a contribution margin ratio of 40%.Fixed expenses total $120,000 annually.The company that makes and sells the product has an income tax rate of 40%.How many units must be sold to yield an after-tax operating profit of $30,000?

• A) 21,250 units.
• B) 18,750 units.
• C) 24,375 units.
• D) 14,167 units.Units required = (120,000 + 50,000)/(20 * .40)= 21,250 units.

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